Tesco supplier relations ‘better than ever’ as sales rise

Tesco reported its first rise in UK sales for seven years (Flickr/Tesco PLC)

Tesco said its supplier partnerships were “as strong as they have ever been”, as it reported a 1.3% rise in UK like-for-like food sales in its full-year results.

The supermarket was well prepared to tackle challenging market conditions over the coming year, thanks to its strong supplier relations, it said in its preliminary results released today (April 12). Tesco also revealed its first rise in UK total sales for seven years.

A Tesco statement said: “With a much more competitive offer and supplier partnerships as strong as they have ever been, we are much better positioned to navigate challenging market conditions.

‘Improvement in profitability’

“We made good progress over the last year, further strengthening our customer offer and delivering an improvement in profitability a little ahead of expectations.”

Total Tesco group sales were up 4.3% to £49.9bn in the year to February 28, while net debt was cut by 27% to £55.9bn.

Tesco results – at a glance
  • UK food sales rise 1.3%
  • First rise in UK sales for seven years
  • Supplier relations “as strong as they have ever been”

Multi-buy promotions fell by 24% year-on-year at Tesco, as a health select committee said childhood obesity could be cut by halting cut-price food promotions.

Tesco said it was still “engaging” with the Competition and Markets Authority over the planned £3.7bn mega merger with food wholesaler Booker, and anticipated a decision by early 2018 at the latest.

‘Exclusive fresh food brands’

Tesco chief executive Dave Lewis said: “Our exclusive fresh food brands have strengthened our value proposition and our food quality perception is at its highest level for five years. At the same time, we have increased profits, generated more cash and significantly reduced debt.

“We are confident that we can build on this strong performance in the year ahead, making further progress towards our medium-term ambitions. On top of this, our proposed merger with Booker will bring together two complementary businesses, driving additional value for shareholders by realising substantial synergies and enabling us to access the faster growing ‘out of home’ food market.”

 

What the analysts say about Tesco results
  • “Dave Lewis’s Tesco train rumbles on. The £6.3bn loss of two years ago has been consigned to the records of history, but Tesco’s historic troubles have left a lingering mark on its current results, with statutory pre-tax profits well below expectations, thanks to a £235M charge from the Serious Fraud Office and the Financial Conduct Authority for overstating its profits in 2014. Past indiscretions aside, there is plenty for Tesco executives to crow about in today’s numbers”

David Alexander, GlobalData

  • “Tesco remains on quite a long recovery journey given how far the business fell from grace earlier in this decade whilst this is so, therefore, we take genuine encouragement from the ongoing progress that has been delivered by ceo Dave Lewis and his team”

Clive Black and Darren Shirley, Shore Capital

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